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A benefit that is enjoyed by a third-party as a result of an economic transaction.
This website is an excellent guide to understanding externalities.
Judge quashes order to repaint London house, in win for property developer who denied choosing colour scheme out of spite
Mike Munger discusses externalities and orange blossoms.
If Art sells potato chips to Betty, both Art and Betty are happy with the transaction. Betty has chips, and Art has been paid for them.
A brief video covering the concept of externalities.